The most important signal sent by the unilateral legislation in France and Germany is the lack of political will to sort out the banking mess, which is at the heart of the eurozone crisis. Instead, governments are seeking refuge in symbolic gestures.

In the wake of the immediate crisis, the priority should have been the recapitalisation of the banks with public money, the closure and merger of weak banks, and to ensure that banks are not trying to adjust their balance sheets by running down loans to companies. This is what is happening in southern Europe now. My estimate is that the eurozone’s banking system is undercapitalised to the tune of €500bn to €1tn. The problem is not only Spanish banks, but also German and French ones, which have been more skilful at hiding their losses. If the recovery turns out to be as shallow as I expect, these losses will show up not too long from now.